Hitting home

Cynicism and contempt. Isn’t there anything new from the state’s budget mismanagers?

Not judging by what local government leaders heard from Gov. Arnold Schwarzenegger on Monday. He told them to brace themselves for more. He said that he plans to release two summaries of his budget today. One optimistically assumes that the budget propositions on Tuesday’s ballot will pass (something that is increasingly unlikely). The other -- based on defeat at the polls -- will contain, among other nasty surprises, a forced loan from cities and counties to the state for 8% of their property tax revenues.

According to the League of California Cities, L.A. would be forced to loan the state $67.7 million. The county would be particularly hard hit, giving up as much as $250 million. The overall impact on local government -- and your neighborhood -- is estimated at just over $2 billion.

Taking 8% of the property taxes now used to fund local governments would force deep cuts in the services and programs delivered by your city and county. Worse, a property tax shift fixes nothing. The state is obligated to repay the local governments -- with interest -- in three years. That just kicks the state’s deficit down the road. This might make cynical sense for termed-out legislators and Schwarzenegger. But the state will have dug itself a deeper hole from which it’s less likely to recover.

Forced lending is a provision of a proposition voters approved in 2004, which was supposed to stop the state’s dipping into the funds for city and county services. Between 1991 and 2003, the state budget had shifted more than $40 billion from cities, counties and redevelopment agencies to pay for state programs. Voters who overwhelmingly supported curbs on extractions from local governments probably thought they had put a firewall between their neighborhood and the cynical and contemptuous authors of the state budget. It turns out that the wall of separation is dangerously porous.

Taking from local governments comes at a time when they are struggling to cope with the lower property and sales tax revenues that have come with declining property values and curtailed spending.

My city has budgeted carefully, put reserves aside for rainy days and taken care to keep programs and services in line with revenues. We thought we might be lucky, that fiscal good sense would get us through these tough times. Our reward is the state’s indifference.

Some cities and counties will probably try to replace the state’s grab by borrowing, using the state’s obligation to pay back its loans as collateral.

Other local governments will try to use federal stimulus funds to make up for the state’s borrowing. But that certainly isn’t what Congress had in mind. Instead of using the stimulus money to create jobs and preserve neighborhoods, cities and counties will be getting from Washington only to give to Sacramento. And if local borrowing can’t replace lost revenue, or if stimulus funding can’t be shifted under federal regulations, local governments would still have to cut services and programs.

In recognition of local government’s fragility, the Department of Finance wants the governor to wait until after December to put the squeeze on cities and counties. Any sooner and some cities and counties simply could not pay.

Given their own declining revenues, cities and counties have begun mandatory work furloughs, laid off employees, threatened public safety jobs and cut back on park and library programs just as summer begins. Some cities are in even worse shape. Privately, there is talk among city managers that as many as 60 of California’s 480 cities may be teetering on the edge of insolvency even without the state’s latest move. Some cities have already gone over the cliff. Only a light push would send a few more over.

The quality of life in California’s neighborhoods will be part of the wreckage. Closed libraries mean kids won’t have a place to go after school. Unsupervised parks means they won’t have a safe place to play. Furloughed workers won’t be available to process your business license, check your building plans or deal with your complaint. Everyday life -- the level at which local government works -- will be harder and coarser.

Government by cynics and the contemptuous has its own ugly logic. Forced state loans may only be another scare tactic to get people to support the budget propositions on Tuesday’s ballot. Except that fear seems to have lost its power, according to recent polling.

Now I’m truly afraid. A neighborhood is as intricate a social ecosystem as a tropical rain forest, a web of interdependencies. Your trash is hauled away. Your street is swept. Needs you don’t even know you have are met by the people in local government. The fabric of neighborhood life is tearing, the people who hold it together are running out of options, and cities and counties are about to be run over by a state government bankrupt of ideas. Neighborhoods will suffer.